CH 15 (AC 332)

ZInc Co.'s adjusted trial balance at December 31, 2017 includes the following account balances: Common stock, $3 par $600,000 Additional paid-in capital 800,000 Treasury stock, at cost 50,000 Net unrealized loss on non-current marketable equity securities 20,000 Retained earnings: appropriated for uninsured earthquake losses 150,000 Retained earnings: unappropriated 200,000 What amount should Zinc report as total stockholders' equity in its December 31, 2017 balance sheet?

$1.68 million

Zinc Co.'s adjusted trial balance at December 31, 2017 includes the following account balances: Common stock, $3 par $600,000 Additional paid-in capital 800,000 Treasury stock, at cost 50,000 Net unrealized loss on non-current marketable equity securities 20,000 Retained earnings: appropriated for uninsured earthquake losses 150,000 Retained earnings: unappropriated 200,000 What amount should Zinc report as total stockholders' equity in its December 31, 2017 balance sheet?

$1.68 million

Colson Inc. declared a $230,000 cash dividend. It currently has 12,000 shares of 5%, $100 par value cumulative preferred stock outstanding. It is one year in arrears on its preferred stock. How much cash will Colson distribute to the common stockholders?

$110,000

Luther Inc., has 4,000 shares of 5%, $50 par value, cumulative preferred stock and 100,000 shares of $1 par value common stock outstanding at December 31, 2018, and December 31, 2017. The board of directors declared and paid an $8,000 dividend in 2017. In 2018, $40,000 of dividends are declared and paid. What are the dividends received by the preferred stockholders in 2018?

$12,000

Hernandez Company has 560,000 shares of $10 par value common stock outstanding. During the year, Hernandez declared a 15% stock dividend when the market price of the stock was $30 per share. Four months later Hernandez declared a $.50 per share cash dividend. As a result of the dividends declared during the year, retained earnings decreased by:

$2,482,000

At the beginning of 2015, Flaherty Company had retained earnings of $400,000. During the year Flaherty reported net income of $100,000, sold treasury stock at a "gain" of $36,000, declared a cash dividend of $60,000, and declared and issued a small stock dividend of 3,000 shares ($10 par value) when the fair value of the stock was $20 per share. The amount of retained earnings available for dividends at the end of 2018 was:

$380,000

Anders, Inc., has 15,000 shares of 4%, $100 par value, cumulative preferred stock and 60,000 shares of $1 par value common stock outstanding at December 31, 2018. There were no dividends declared in 2016. The board of directors declares and pays a $110,000 dividend in 2017 and in 2018. What is the amount of dividends received by the common stockholders in 2018?

$40,000

The following is the stockholders' equity section of Harbor Co.'s balance sheet on December 31: Common stock $10 par, 100,000 shares authorized, 50,000 shares issued of which 5,000 have been reacquired, and are held in treasury $ 450,000 Additional paid-in capital common stock 1,100,000 Retained earnings 800,000 Subtotal $2,350,000 Less treasury stock (150,000) Total stockholders' equity $2,200,000 Harbor has insignificant amounts of convertible securities, stock warrants, and stock options. What is the book value per share of Harbor's common stock?

$49

On June 30, 2018, when Ermler Co.'s stock was selling at $65 per share, its capital accounts were as follows: Capital stock (par value $50; 60,000 shares issued) $3,000,000 Premium on capital stock 600,000 Retained earnings 4,200,000 If a 100% stock dividend were declared and distributed, capital stock would be:

$6,000,000

The stockholders' equity section of Gunkel Corporation as of December 31, 2017, was as follows: Common stock, par value $2; authorized 20,000 shares; issued and outstanding 10,000 shares $ 20,000 Paid-in capital in excess of par 30,000 Retained earnings 85,000 $135,000 On March 1, 2018, the board of directors declared a 15% stock dividend, and accordingly 1,500 additional shares were issued. On March 1, 2018, the fair value of the stock was $6 per share. For the two months ended February 28, 2018, Gunkel sustained a net loss of $15,000. What amount should Gunkel report as retained earnings as of March 1, 2015?

$61,000

Jones Co. had 50,000 shares of $5 par value common stock outstanding at January 1. On August 1, Jones declared a 5% stock dividend followed by a two-for-one stock split on September 1. What amount should Jones report as common shares outstanding at December 31?

105,000

Selected information for Irvington Company is as follows: December 31 Year 1 Year 2 Preferred stock, 8%, par $100, nonconvertible, noncumulative $125,000 $125,000 Common stock 300,000 400,000 Retained earnings 75,000 185,000 Dividends paid on preferred stock for year ended 10,000 10,000 Net income for year ended 60,000 120,000 Irvington's return on common stockholders' equity, rounded to the nearest percentage point, for year 2 is

23%

Gulfport Corporation was organized in January 2017 with authorized capital of $.0001 par value common stock. On February 1, 2017, shares were issued at par for cash. On March 1, 2017, the corporation's attorney accepted 5,000 shares of common stock in settlement for legal services with a fair value of $25,250. Additional paid-in capital would increase on: 2/1/2017 3/1/2017 1) Yes No 2) Yes Yes 3) No No 4) No Yes

4

Rudd Corp. had 700,000 shares of common stock authorized and 300,000 shares outstanding at December 31, 2016. The following events occurred during 2017: January 31 Declared 10% stock dividend June 30 Purchased 100,000 shares August 1 Reissued 50,000 shares November 30 Declared 2-for-1 stock split At December 31, 2017, how many shares of common stock did Rudd have outstanding?

560,000

True or false? The accounting for a property dividend should be based on the carrying value (book value) of the nonmonetary assets transferred.

False

Which of the following best describes a possible result of treasury stock transactions by a corporation?

May decrease but not increase retained earnings

On September 14, 2017, Gayot Company reacquired 12,000 shares of its $1 par value common stock for $40 per share. Gayot uses the cost method to account for treasury stock. The journal entry to record the reacquisition of the stock should debit:

Treasury Stock for $480,000

Total stockholders' equity represents:

a claim against a portion of the total assets of an enterprise

A mining company declared a liquidating dividend. The journal entry to record the declaration must include a debit to:

a paid-in capital account

All of the following statements are true regarding preferred stock except:

a preference a to dividends assures the payment of dividends

The balance in Common Stock Dividend Distributable should be reported as a(n)

addition to capital stock

The book value per share is based on:

common shares outstanding

In every corporation, the one class of stock that represents the basic ownership interest is called:

common stock

An entry is not required on the:

date of record

What effect does the issuance of a 2-for-1 stock split have on each of the following?

decreases par value per share, but has no effect on retained earnings

The declaration and issuance of a stock dividend larger than 25% of the shares previously outstanding:

decreases retained earnings but does not change total stockholders' equity

The Revaluation Surplus of IFRS is:

different than US GAAP in that it allows the increase in valuation

Stock issued in non-cash transactions should be recorded at the:

fair market value of the stock issued or the property received, whichever is more readily determinable

The issuer of a 5% common stock dividend to common stockholders should transfer from retained earnings to paid-in capital an amount equal to the:

fair value of the shares issued

A dividend which is a return to stockholders of a portion of their original investments is a:

liquidating dividend

A property dividend should be recorded in retained earnings at the property's

market value at date of declaration

The accounting for treasury stock retirements under IFRS

may have the excess charged to paid-in-capital, depending on the original transaction related to the issuance of the stock

The rate of return on common stock equity is computed by dividing:

net income less preferred dividends by average common stockholders' equity

Additional paid-in capital is not affected by the issuance of:

no-par stock

Which of the following type of stock will not increase Additional Paid-in Capital when issued?

no-par value stock

Cash dividends are paid on the basis of the number of shares

outstanding

Under the cost method, when treasury stock is sold for more than its cost, the excess is credited to:

paid-in capital from treasury stock

Quirk Corporation issued a 100% stock dividend of its common stock which had a par value of $10 before and after the dividend. At what amount should retained earnings be capitalized for the additional shares issued?

par value

Which of the following features of preferred stock makes the security more like debt than an equity instrument?

redeemable

Under IFRS, the amount of capital received in excess of par value would be credited to:

share premium

Which dividends do not reduce stockholders' equity?

stock dividends

A feature common to both stock splits and stock dividends is:

that there is no effect on total stockholders' equity

The residual interest in a corporation belongs to:

the common stockholders

Which one of the following is NOT a right of common stockholders?

to share proportionately in all management decisions

Which of the following does not represent a pair of GAAP/IFRS-comparable terms?

treasury stock/repurchase reserve

All of the following are features of preferred stock except:

voting rights